2017 continues to show a strong trend of growth in investments for MENA startups with deal flow in the first 9 months of 2017 (169 deals), surpassing full year 2016 (164 deals)
Q3 2017 proves to be the strongest Q3 in recent history with 62 new deals and over $76m of investment in MENA startups
$254m of investment in the first 9 months of 2017 (excluding Souq & Careem) is only $28m short of full year 2016 with three months still left to go
FinTech dominates the top funded deals in Q3 2017 making up 3 of the top five investments including Paytabs ($20m), Souqalmal ($10m) and Beehive ($5m)
500 Startups have been the most active VC by number of deals following the launch of their Falcon Fund with 16 disclosed deals followed by MEVP with 10 and Turn8 with 8. Also see the emergence of new KSA investors like Riyadh Taqnia and Saudi Aramco Ventures.
The UAE continues to see the lions share of activity claiming 50% of deals which makes up 37% of total disclosed funding in the first 9 months of 2017
(Dubai, United Arab Emirates) October 8th, 2017 – With GITEX Future Stars opening GITEX today, MAGNiTT takes this opportunity to provide an update on MENA funding with a review of activity for the first 9 months of 2017. The report shows that the summer months were not as quiet as presumed with 62 deals announced and over $76m deployed across the MENA region.
Key takeaways from MAGNiTT’s Q3 MENA Funding report include:
1. Q3 Funding: Deals continued to flow throughout the summer, especially in September following the return from holidays. This proved to be the strongest Q3 on record based on MAGNiTT data:
169 deals in the first 9 months of 2017 now surpasses the 164 deals invested over full year 2016
Total investment year to date now stands at $404m including the $150m invested in Careem earlier this year.
Total investment in the first 9 months of 2017, excluding Souq & Careem, stands at $254m, only $28m short of full year 2016 with three months still left to the year
MAGNiTT’s founder, Philip Bahoshy, notes that it is “extremely positive to see continued investment in MENA startups. The summer is generally perceived as a quieter period in the region. However, we saw a flurry of announcements in September and we expect this trend to continue through to year end”. With regards to overall trends he notes that it is “positive to see that the region has now surpassed total disclosed deals in 2017. This highlights the increased appetite in the startup space from existing as well as new regional and international investors.” He commented however that there is still a gap to 2016’s record total funding figure which he attributes in part to Amazon’s acquisition of Souq.com and the 20% of 2017 deals which have remained undisclosed.
2. Investment Breakdown: For the first time MAGNiTT looks to compare trends across Quarters starting with industry and geography with Fintech being the biggest winner of investment and KSA seeing increased activity:
FinTech maintains it’s pace as the hottest industry in the region gaining 2% Quarter on Quarter
FinTech startups also make up 3 of the 5 largest investments in Q3 - Paytabs ($20m), Souqalmal ($10m) and Beehive ($5m). AlTibbi a healthcare provider ($6.5m) and Foodics a restaurant management platform ($4m) make up the top 5.
E-commerce investment saw the biggest drop with a 4.5% fall in deal flow.
The UAE still continues to be the dominant market with 50% of all deals and 37% of all funding even excluding CAREEM’s investment of $150m
Notably there was an increase in activity seen in KSA with 10% more deal flow YTD than Q2 YTD
SEED funding remains the dominant ticket size for regional investors at 46% of deal flow despite only making up 19% of the total investment in regional startups
3. VC activity and Exits: VCs continue to be active in the region participating in the investment of multiple startups:
500 Startups have been the most active VC by number of deals following the launch of their Falcon Fund with 16 disclosed deals. This was followed by MEVP with 10 deals and Turn8 with 8 deals.
KSA funding institutions have made their presence know with Riyad Taqnia participating in 3 out of the 5 largest investment deals in Q3 and Saudi Aramco Ventures leading the investment of Paytabs with $20m, the largest investment in Q3.
MEVP, following their announcement of investment with Mr. Allabbar, continued to be active in the MENA startup space with 10 investments YTD
There was no slowing down in exits either with 5 notable acquisitions including Amazon’s purchase of Wing.ae as well as Yaoota’s purchase of Mobi Hall and Mobilesgate in Egypt
Bahoshy added: “existing players have continued to participate in the startup space while it is interesting to note the emergence of new investment players in the MENA region.” Go Compare’s involvement in Souqalmal’s Series B funding round also follows a trend emerging in MENA where large international Startups are taking strategic investments in comparable regional players to further expand their footprint. This is similar to Amazon’s acquisition of Souq and Didi’s investment in CAREEM. Bahoshy anticipates that this will be a continuing trend as the market matures.
In conclusion, the latest report shows continued strengthening of the ecosystem to provide optimism for decision makers. MAGNiTT caveats that by highlighting the continued requirement for new funds to fuel the ecosystem. This will be further supported as multiple regional investors close their second funds creating much needed liquidity to fuel new and existing startup’s growth.